* Dollar on back foot after lacklustre US retail sales data
* Market shows little reaction to weak Q2 Japan GDP
By Shinichi Saoshiro
TOKYO, Aug 15 (Reuters) - The dollar was on the defensive early on Monday, weighed by downbeat U.S. data that tempered expectations of a near-term interest rate hike by the Federal Reserve.
The greenback was little changed at 101.370 yen after losing 0.6 percent on Friday, when the U.S. indicators were released. The euro was steady at $1.1161 after edging up 0.2 percent on Friday.
The dollar index was effectively unchanged at 95.755 after going to as low as 95.254 on Friday, its lowest since August 3.
The dollar came under pressure after Treasury yields slid sharply in response to weaker-than-expected U.S. retail sales and producer prices data released on Friday.
Already slim expectations for a U.S. interest rate increase in September were trimmed even further after the data, while prospects for a rate hike in December also took a knock.
Federal funds futures implied traders saw a 43 percent chance the U.S. central bank would increase interest rates at its December policy meeting, down from 47 percent shortly before the release of Friday's data.
"The dollar's push lower that we anticipate until later in the month gained momentum following the disappointing U.S. retail sales report before the weekend," wrote Marc Chandler, global head of currency strategy at Brown Brothers Harriman.
"The dollar's technical tone has deteriorated, while economic data is unlikely to be sufficient to reverse sentiment."
U.S. economic data due this week include Tuesday's housing starts, consumer price index and industrial output and the Philadelphia Fed's business sentiment index on Thursday.
Asian currency markets showed little reaction to Monday's data which showed Japan's economic growth stalled in the second quarter.
The world's third-largest economy expanded by an annualised 0.2 percent in the second quarter, less than a median market forecast for a 0.7 percent increase, Cabinet Office data showed on Monday.
Sterling was down 0.1 percent at $1.2910.
The focus was on whether this week's UK economic data would either push the pound to or away from the 31-year low of $1.2798 touched after the June Brexit referendum.
Signs of economic weakness after the Brexit vote are expected to provide incentive for the Bank of England to easy monetary policy further, which in turn could weaken the pound.
British indicators due this week include Tuesday's consumer and producer prices, Wednesday's employment and Thursday's retail sales.